The Australian Defence Force (ADF) has acknowledged for the first time that a number of its past and present members have suffered severe side-effects from the use of an anti-malarial drug known as mefloquine or Lariam.

Key points:

Mefloquine or lariam is one of three anti-malarial medications approved by the Therapeutic Goods Administration

Estimates up to 1,250 current and former ADF members have brain injuries from the medication

ADF maintains less than 1 per cent of members receiving mefloquine

The medication has led to permanent psychological damage, anxiety attacks, nightmares, suicidal thoughts and hallucinations in some people.

Defence personnel have previously complained that their concerns about the drug were not taken seriously by the ADF.

Major Stuart McCarthy started experiencing things that included major depression, suicidal thoughts, vertigo and tinnitus after he started taking the drug in 2001.

"That's when I started saying up through the chain of command, and I'm not the only one here, there are many other veterans who are affected, and for the efforts that I made to do that, I was threatened with disciplinary action, repeatedly threatened and gagged about approaching the media," Major McCarthy said.

"And anybody like me who has dared to stand up and ask for proper help has just been threatened."

Mefloquine or Lariam is one of three anti-malarial medications approved by the Therapeutic Goods Administration for malaria prevention.

It is the ADF's third line agent, meaning it is only used when one of the other two medications does not work.

'More than 1,000 ADF members with brain injuries'

Major McCarthy estimates there are up to 1,250 current and former ADF members who now have permanent brain injuries as a result of taking mefloquine or tafenoquine.

And anybody like me who has dared to stand up and ask for proper help has just been threatened. Personally I can't trust anybody in the ADF medical system.

Major Stuart McCarthy

Tafenoquine is another anti-malarial medication Defence has given to personnel, but it was not approved by the TGA.

Major McCarthy alleges the ADF has systematically downplayed the number of people who have been affected by the drugs.

"Personally I can't trust anybody in the ADF medical system," he said.

"They're not worthy of trust.

"I mean, they will provide people with drugs that are known to be neurotoxic, and when they get caught out, they'll cover it up."

The Australian Defence Force maintains that less than 1 per cent of members currently deployed and receiving anti-malarials are taking mefloquine.

"While in the majority of cases the side-effects associated with mefloquine disappear after ceasing the medication, Defence accepts that some people do continue to experience ongoing issues," a Defence spokesperson said.

"Those who claim to have ongoing problems linked to side-effects from the use of mefloquine are provided with appropriate medical treatment including specialist referral, assessment and treatment.

"Further to this, ADF members who are diagnosed as suffering longer-term or permanent side-effects from mefloquine use can also claim compensation through the Department of Veterans' Affairs (DVA) if the mefloquine was prescribed for service reasons."

Calls for judicial inquiry

Major McCarthy is not satisfied with the response, but acknowledges it contains a major concession from the ADF.

"The one positive thing about it is it's the first time that Defence has conceded that mefloquine can cause long-term side-effects ... but the surprising thing is just the deceit that they continue on with," Major McCarthy said.

"So all of the claims about 'they're supporting veterans in seeking support for health problems' — they're just a massive lie.

"It's a kick in the guts. There needs to be a judicial inquiry that can prosecute crimes."

Major McCarthy has made complaints against senior officials within the Defence Force, which are currently being investigated.

A spokesperson for the ADF has confirmed to the ABC that the Inspector General is currently inquiring into certain allegations, made by one Defence member, into the use of the drug mefloquine in the ADF to determine whether any failures in military justice may have occurred.

As it remains ongoing, Defence has said it will not make any further comment.